The Canadian government is considering retaliatory tariffs on U.S. biofuel imports following Washington’s recent decision to enforce duties on Canadian biofuels. Earlier this month, the U.S. government announced a 10% tariff on Canadian biofuels, citing market distortions. In response, Canada is actively evaluating reciprocal measures, particularly targeting U.S. ethanol imports, which have reached record highs in recent months.
According to the U.S. Department of Agriculture (USDA), Canada has consistently been the largest destination for U.S. ethanol exports, accounting for a 25% share in 2024.
In addition to the recently proposed biofuel tariffs, the U.S. government has already enforced duties on some Canadian goods, including a 10% tariff on aluminum and a 25% tariff on steel imports. In response, Canada announced a first round of retaliatory tariffs on U.S. imports, covering a range of goods from steel and aluminum products to agricultural commodities and manufactured goods.
While the Canadian federal government deliberates on its next steps, British Columbia has already taken proactive measures to enhance domestic biofuel production. Under its , the province has increased the renewable content requirement for diesel from four percent to eight percent, with further mandates for domestic biofuel production set to take effect on April 1. These policy shifts are designed to reduce reliance on U.S. imports.
Earlier this week, the U.S. government temporarily suspended the implementation of the biofuel tariffs, pushing the enforcement deadline to April 1. However, Canada has made it clear that it is prepared to enact a second wave of retaliatory tariffs on U.S. biofuels should the U.S. proceed with its planned duties.